After remaining flat at around KD14.7 billion in the previous month, the Kuwait's budget surplus for the first nine months of the fiscal year jumped to KD16.1 billion ($56.7 billion) in December before allocations to the Reserve Fund for Future Generations, according to the country's top lender National Bank of Kuwait (NBK).

The surplus, equivalent to 33 per cent of annual 2012 GDP, was lifted by a combination of soaring revenues and comparatively softer spending grow, said NBK in its report.

With reported spending likely to pick-up pace in the remaining three months of the year, the final budget surplus could close at up to KD14 billion, it added.

The Kuwaiti lender pointed out that government spending levels continued to climb in December, though the rate of spending remains well below its historic trend.

"While current expenditures have provided the main engine of spending growth so far this year, investment spending has stayed relatively subdued. Soaring revenues have continued to outpace growth in spending - despite the recent acceleration - generating massive budget surpluses," said NBK citing latest public finance data.

The total revenues climbed to KD24.3 billion in the first nine months of FY 2012/13, about KD 2.8 billion higher than a year ago.

Oil revenues continued to rise rapidly by some 13 per cent y/y despite declining oil prices - Kuwait Export Crude prices were down 1 per cent y/y over the same period. Additionally, non-oil revenues have also risen strongly by a large 26 per cent y/y on the back of higher miscellaneous revenues and fees.

According to NBK, government spending accelerated to KD8.2 billion in December, only KD0.1 billion below levels seen in the comparable period of the previous year. Total spending was up by some KD1.2 billion from November, compared to a faster pick-up of around KD2.7 billion a month earlier, its stated.

"With three-quarters of the current fiscal year already behind us, just 38 per cent of the budget has been spent – lower than usual for this stage of the year. Nevertheless, with spending typically accelerating in the final months of the year, there is still scope for expenditures to pick-up going forward," said the NBK report.

The current spending, which was up year-on-year in December for the first time in FY 2012/13, reached KD 7.4 billion. Current expenditures continue to be driven by the ‘wages & salaries’ component, which was up by some 17 per cent y/y.

The remaining months are likely to see an acceleration in the larger ‘miscellaneous expenditures & transfers’ segment, supported by an expected rise in inter-governmental transfers - including large transfers to cover the actuarial deficit in the social security fund, the Kuwaiti lender said in the report.

NBK pointed out that the capital spending reached KD0.7 billion in December - almost KD0.2 billion lower than a year ago. Even more disappointing, the rate of capital spending reached just 27 per cent of the full-year budget, compared to a 5-year historic average of 36 per cent for a similar 9-month period.

The final quarter of the fiscal year could see an improvement in investment expenditure levels as the government accelerates spending on infrastructure. However, for the year as a whole, capital expenditure could register a small year-on-year decline.